A proposed vacancy tax set to cool Hong Kong’s red-hot property market would just be a “political gesture” and instead delay the roll-out of completed flats in the short term, market watchers said on Wednesday.
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Shih Wing-ching, founder of Centaline Property Agency, said the vacancy rate of flats in the city was around 3.7 per cent, calling it relatively low compared with other places worldwide.
Citing government estimates, Shih said there were about 9,000 vacant and newly built residential properties in Hong Kong.
Announced last year by Chief Executive Carrie Lam Cheng Yuet-ngor, the vacancy tax was designed to pry open supply bottlenecks by imposing fines on developers for hoarding new homes, amid ever-rising prices in the world’s least affordable property market.
The plan is slated for discussion by the Legislative Council’s housing panel on April 1.
Speaking on a radio programme, Shih warned that developers might resort to various tactics to get around the tax, which would further delay market access to such homes.
“This kind of policy will be unfavourable to society. Then supply for sale will become less,” he said, referring to flats in the short term.
“Even you really have methods to squeeze out [supply of new flats], it cannot solve the existing problem. So the vacancy tax is not for tackling housing problems. It’s more of a political gesture.”
Speaking on the same programme, Democratic Party lawmaker Andrew Wan Siu-kin revealed latest updates he had heard about the tax – it would apply to newly completed flats that were left vacant a year or more from developers’ receipt of occupation permits.
The tax would be equivalent to double that of a flat’s rateable value – an estimated annual rental value at a designated date. Developers would need to file annual updates on the number of vacant new housing to the government, according to him.
Wan, who is also deputy chairman of Legco’s housing panel, agreed that the vacancy tax would only be a political gesture.
“It’s better than nothing. But I also liken it to a paper tiger. It can frighten people somewhat. But I doubt its effect,” the lawmaker said.
He added that the tax should also target foreign investors in the second-hand housing market, and be extended to non-local residents and their companies.
“It is understood that [the proposed tax] is one of the tricks to discourage property speculation. But the government only practised the first chapter of this art,” he said, suggesting the measures were incomplete.
But Shih insisted the key issue was a lack of supply, pointing out that if developers and foreigners were used as “sacrificial offerings”, the housing problem would still not be addressed.